Los Angeles, Wooed by Occupy Protest, May Face Higher Debt Costs

[dkf]

Los Angeles faces tens of millions of dollars in additional borrowing costs after the City Council told anti-Wall Street protesters it intends to cut ties with banks involved in financial wrongdoing, Administrative Officer Miguel Santana said.

The city may have to pay $27.8 million in termination fees and replacement costs if it’s prohibited from doing business with banks providing letters of credit for just one infrastructure program, Santana said yesterday in a memo to Mayor Antonio Villaraigosa. Debt service would climb $14.9 million a year if it has to refinance commercial paper into long-term debt at higher rates, Santana said in a telephone interview.

Council members in the nation’s second-largest city by population passed a resolution Oct. 12 in support of the demonstrations that started as Occupy Wall Street in New York. They promised to accelerate the issuance of “report cards” rating banks on such things as foreclosures and charitable giving. The vote followed three hours of public comment, much of it by participants in Occupy Los Angeles who’ve camped in front of City Hall since Oct. 1.

“The financial repercussions will be immense” if his office is prohibited from doing business with many of its current lenders, Santana said in the report.

http://www.bloomberg.com/news/2011-10-18/los-angeles-faces-higher-debt-costs-under-occupy-protest-s-plan.html

[Stardust]

1. Well, that stinks.

[ixion]

2. it makes sense. The corrupt system is set up to favor lending institutions

which is what the Occupy Movement is fighting against. More than anything, I think this illustrates why there needs to be REAL change.

[dkf]

3. Well they picked the current institution for a reason I imagine. Maybe they are cheaper.

[Warren Stupidity]

4. Or maybe they are big fat corrupt institutions engaged in corrupt practices.

"Los Angeles in 2008 sued more than 30 institutions it accused of engaging in abuse related to financial derivatives and bid-rigging, Santana said. Two of the three letter-of-credit providers for the Municipal Improvement Corporation of Los Angeles Commercial Paper Program are defendants in the lawsuit, according to Santana."

LA is financially entangled, like lots of governments, with the crooks on wall street. Getting unentangled is not easy, or cheap in the short run, but it is the right thing to do.

[dkf]

5. Then so be it if they think it will benefit them in the end.

[ixion]

6. cheaper, only if you don't read the fine print

as is evidenced by the situation they're in now.

In any case, though, the overall playing field has been rigged to favor financial institutions over all else, which is why we're in the mess we're in now, to a large degree.